Venus Tokenomics Upgrade v3.0 Proposal

Venus Tokenomics Upgrade v3.0 Proposal


Venus Protocol is approaching a year since the previous tokenomics were ratified by the community and much has changed in the ecosystem at large. As a new market cycle commences it’s important for the community to adapt to changes in the environment to ensure continued growth.

After collecting feedback and ideas for the next iteration of the Venus Tokenomics, consulting key stakeholders in the ecosystem, and going through multiple rounds of discussion on topics such as risk, treasury, and product development we are publishing a draft for your consideration.

A few principles guided structuring community input into this model: rewarding and incentivizing protocol retention, reinvestment of value, creation of flywheels, embedding greater shortfall defense.

Following these principles, the key points of the new framework are as follows:

Key Points

  1. XVS continues to be the core utility token of Venus with voting privileges attached capturing a growing source of protocol value

  2. The XVS emissions will be curtailed by 10M, reducing the remaining emissions timeline from 4 years to 2 years, with the total supply capped at 19,745,109 XVS

  3. A new SBT (soulbound token) will be issued, Venus′ Prime, which unlocks access to boosted yields across selected markets.

  4. A minimum of $1mm equivalent XVS staked in the Venus Vault will be required to access liquidation by external parties

  5. Updating the mechanics of the XVS Vault so only active Stakers capture protocol revenue simultaneously with voting rights. Withdrawal period will no longer capture rewards

XVS Emissions Schedule Adjustment

Currently selected markets are incentivized via additional XVS incentives, via daily emissions. These emissions were previously scheduled to run for a total of 6 years, with 4 years remaining, for a total supply of 30mm XVS. This proposal would cut those emissions by 2 years, thus reducing the emission period to 2 remaining years, resulting in a 20mm total supply. The daily XVS emissions schedules will remain intact. We may look to add governance to the markets selected for incentive reception with the launch of additional protocol features, but is not an immediate part of this tokenomics update.

Introduction of Venus Prime Soulbound Token (SBT)

In order to drive protocol retention and further a growing community of dedicated lenders and borrowers, a new mechanism for incentivizing loyalty has been devised using SBTs (soulbound tokens) called Venus Prime . Venus Prime tokens unlock access to variable boosted yields across selected markets as determined by the gross TVL supplied to the markets; combining the TVL power of supply and borrow (ie the sum of the absolute values of the supplied and borrowed amounts, if someone supplies $1k and borrows $500, they would have gross TVL evaluated at $1,500. The gross TVL is based on the daily average balance for the quarter). These SBTs cannot be transferred, bought or sold, and must be earned via the criteria laid out below. The supplemental yield will be paid in the currency in which it is borrowed or supplied, but based on the overall protocol revenue allocation. This is similar to the XVS Vault revenue capture, except paid in the selected supplied assets based on the TVL criteria.

Additionally, the TVL that boosted yields apply to will be capped to $1mm per SBT.

The boosted yield APRs will be applied equally to token holders based on their TVL criteria, and while the boost is based on the revenue collected each quarter, we anticipate yields to be boosted by 5 - 15%.

Venus Prime tokens will be issued in two forms:

Earned & Revocable: Venus Prime tokens may be earned by staking XVS in the vault for at least 90 days. The XVS vault does not allow for up-front staking, but rather Venus Prime tokens will be issued based on reputation based staking - that is once the staker has staked XVS for 90 days they will be issued the token. The stakers must maintain a minimum stake of 1,000 XVS tokens to qualify. If they unstake their tokens at any point the clock restarts. If they unstake after being issued the SBT, the token will be revoked and thus will have to restart the staking clock to be awarded the SBT again. .

OGs & Irrevocable: Long standing community members and protocol users may qualify for an irrevocable Venus Prime token, that are issued only if the holder is a user in the top 1,000 of active borrowers in terms of borrow transaction count (minimum borrow of $1,000) over a historical rolling period of 1 year, based on other discretionary criteria to be determined.

Other Use cases:

  1. Discord SBT Token gating (only members with the SBT can access the Venus Prime Discord Channel)
  2. Token gated in real life Parties and Events held by Venus
  3. Other swag and perks and more

Updates to the XVS Vault Mechanics

As we have noticed, many XVS stakers are gamifying the Vault by staking their tokens and immediately requesting withdrawal (but not actually withdrawing the tokens). This allows them to continue receiving rewards, but without the 7-day cooldown period, and does not allow those stakers to participate in governance. As Venus is a DAO, we want active participants in governance, and we also do not want users to have access to a ‘free lunch’. The vault will be updated such that when stakers request withdrawals, they will no longer receive XVS vault rewards (and still will not be able to participate in governance). We hope this will incentivize users to keep their XVS staked and partake in governance more actively. Additionally XVS Vault can be auto-compounding by user request, such that the XVS staked is automatically restaked each payout period and automatically compounded.

Income Allocations and XVS Token Economy for Venus Protocol

|30%|Security Module|
|20%|XVS Vault rewards|
|20%|DAO Operation as directed by community|
|20%|Venus Prime*|
|10%|Paydown shortfall (bonds**)|


Excelente propuesta me encantó

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Awesome :fire: Nice job…
Thank you for listening to the community’s demands :muscle::pray::heart:


This is a tokenomics that definitely exceeded my expectation. Thanks to the team for their work. :smiling_face_with_three_hearts: :smiling_face_with_three_hearts: :smiling_face_with_three_hearts:

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Really great effort and plans. Can’t wait to see it start.

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Great initiative and proposal.

Here comes the VENUS grinch AGAIN…

  1. not really new, but good to hear!
  2. good idea
  3. didn’t we agree we do not need and want a new token? (VRT… anyone remembers? Yeah… new name and kind of different approach - even if I think there were proposals that VRT should be used to give access to boosted yield.
  4. I do not really like that idea… It kind of makes things more dangerous for the protocol to have fewer liquidators… The idea is noble because liquidators would become real stakeholders, but there is a downside also, because only very few people could be liquidators. I would suggest a community approach. Perhaps smart contract that does the liquidation and people could deposit funds and profit from liquidations.


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:white_check_mark: Interesting incentive proposal for XVS through the new SBT tokens and its benefits of use.

With this new proposal 4.0 we will see a greater value of the native tokens and benefits to all Holders. :clap::clap:

Additional the reduction of XVS emission by reducing the time from 4 years to only 2 years, increases its value proposition, ensuring its scarcity and demand.

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I don’t understand the meaning of what’s written below? Could you please explain to us with an example, what can we expect from this? Is this the passive income to Vault stakers, in which coin will this 20% Venus Vault be paid? I think this is the most important feature that gives XVS value but now it’s still a bit vague.
I think that I would prefer to add the 20% Venus Prime also to the vault or take 10% extra from Venus Prime.

Examples would help to understand this better.

Income Allocations and XVS Token Economy for Venus Protocol

|30%|Security Module|
|20%|Venus Vault|
|20%|DAO Operation as directed by community|
|20%|Venus Prime*| (I think I would like to see this go to Vault)
|10%|Paydown shortfall (bonds**)|

I don’t like this SBT token, these perks should only be based on staked amount Venus tokens!
Big suppliers and lenders also got XVS tokens from the protocol. If they don’t have XVS anymore they have probably dumped their tokens onto the market. It would be wrong to give them perks. Let them buy back their XVS to receive perks.

Point 4. Like other users stated as well. Limiting liquidation parties, looks to me as a stability risk for the protocol!

Bir an önce hayata geçirilmesi gereken harika bir güncelleme tebrikler aferin ekip :tada::muscle:t3:

Its good to reduce the supply to 20m. This adds value to current holders. It would also be nice to give back to OG holders who got liquidated with the last team via nft or some other method, not just going 12 months back, but the beginning of the token.

The new tokenomics are great. Except the liquidation part.

  • I don’t see the added value of whitelisting the external liquidators only if they have X staked XVS. It is first against the principle of a permissionless protocol and it is counterproductive as you limit the number of liquidators and if a black swan event occurs, you want to have a maximum of competing liquidators.
  • Each liquidation will require more gas cause the protocol needs to check that the amount of staked XVS is > $1m, and also in case of a flash crash an allowed liquidator could temporarily lose its ability to liquidate at a critical moment.
  • Venus ecosystem (team+vault stakers) already gets 50% of the liquidation reward. Why should we limit the beneficiaries of the other 50%? Will the team’s bots exempted from that limit? If yes, will the profits be shared with the vault holders?

Please, guide me with the logic behind, it is still blurry for me :slight_smile:

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Thanks for your constructive feedback.

  1. The new token is not tradable/transferrable, it comes nowhere close in functionality to anything seen before on a major project.

  2. We left out a piece regarding partner liquidations that will update in the following draft that will clear this concern up.


Great work! and so excited about this!

I would recommend working with a second audit company (such as Hacken or Certic etc.) in order to crosscheck and completely cover the possible security deficiencies.

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Of course I support 100% of this proposal. On boarding more new users must be a priority now.
It is bear market and a unique opportunity to set us apart from other players.

Permissionless does not refer to without governance. I do believe that 1M will get the liquidators get in the XVS game a bit more engaged.

The liquidator measure makes a lot sense as to make easy money at Venus should be a skin into the game and not just someone wich dont use Venus to keep draining liquidity, this had happened for the last year already… anyone and bots being built to liquidate without worry about Venus.

a- a better solution would be allow only people wich has xx% staked into XVS vault, over a determined period to have acess to liquidations, limiting the liquidation to 100 000$ at once… this would allow more people to liquidate big wallets instead a single person liquidate …

b- VENUS OWN LIQUIDATOR VAULT- where community would deposit a bag of coins, wich would be used to liquidate, instead allow outside players to have such priviledge, draining Venus liquidity.(Can be started with some of the current reserves of VENUS), the only rule to acess this Vault should be has atleast 3000\10 000XVS… be skin in the game…

The Venus Prime isnt a token that will be sold or traded as i had understood, it will reward people wich uses the protocol, with more income into the staked\borrowed asset as i had understood. Soo isnt a new token at all.

XVS VAULT Mehchanics

Venus shouldnt damage the stakers at the vault wich stake and unstake right after, as the market is unstable… its normal people wanna to manage their positions with the XVS… and not loose money because it has a 7 days lockup… in last sentence would make something as Cake made in the past wich is a locking period … if claim before a fee will be deducted…

Soo in the general this sounds great news to Venus, as we will be doing a lot things into medium period. I believe just we need to check all possibles cenarios, wich for me the only issue i believe need to be adjusted is the “liquidation”…(limiting liquidation to whales, can bring back Team Bravo… or any other bad player to be eligible to liquidate at Venus…)

Almost forgoted, BNB Validator…

Venus has currently more then Half of the coins required to assume a position as Validator, in fact we could already asssume those spot with around 350 000 BNB we can assume those … and start a new journey with outside revenue to the protocol… instead focus only at lending market revenue… wich is good only with Binance Events wich require BNB… I believe this is the best moment to start those Validator goal… instead burning the BNB We could use them to start this Validator, ( right now this could allow the protocol to get around 3000 BNB each month\100BNB daily…thats a 20 000$daily, and a 600 000$ potencial income each month…the revenue would help a lot the protocol to moove forward and grow …

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There is a valid case that users may want to withdraw XVS from vault, but will be penalized with no rewards for 7 days. That is not correct. If you believe users are gaming the system, then change the lock mechanism that a user can’t request withdraw after adding vault for 7 days. Give the rewards for 7 days and stop the rewards after 7 days. If it up to the user to withdraw after 7 days or add to vault again. After adding to the vault 7 day lock period starts again.

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The adjustments in the loan protocol seem correct to me. To provide some vision I would like to comment on the use cases for the XVS token and how to get more users.

The XVS token is very scarce, it maintains a system of DEFI lending, stablecoin issuance, liquidations, it has huge potential to turn the entire Venus ecosystem into something much bigger if only some things were improved. As the core of the ecosystem, it needs to be protected and focused from there to everything else, whereas currently I feel like they leave it for last, i.e. just a governance token rather than a store of value.

I think XVS is better than BTC… it has a lot more use cases, it’s clean, it has a lot of advantages as digital money and a world store of value. I would like the XVS token to have the central role of the ecosystem at this stage, this will be the best way to attract new investors, show them that it can be one of the best reserves of value in the crypto world.

How to do it? With serious and mature actions that guarantee the trust of the users, a determined and well-communicated schedule that is respected as much as possible, with as few surprises as possible (especially unpleasant ones). Investors want to see that their money is taken seriously and is not going up in smoke. Venus has everything to be one of the best crypto world value reserves, it is time to improve it and carry out the objective, show the public that the reserves can grow and that they will be well invested to give them the confidence of having invested in the best DEFI space. :muscle: